Democrats Press For Vote In Bid To Stop Stanley Plan

June 29, 2002|By MICHAEL REMEZ; Courant Staff Writer

WASHINGTON — Congressional Democrats moved Friday to force the Republican-controlled House to vote on a measure intended to stop companies such as the Stanley Works from reincorporating in Bermuda to avoid American taxes.

Arguing that Republicans have no intention of acting quickly, Minority Leader Richard Gephardt, D-Mo., said the bill's sponsors will try to get more than half of the House members to sign what is known as a discharge petition. Under House rules, that would require House leaders to bring the bill up for a vote.

Shortly afterward, though, Bill Thomas, the California Republican who is chairman of the ways and means committee, said his panel will consider a wide-ranging measure this summer intended to correct problems in the tax code that make it attractive for American companies to engage in these tax schemes.

The effort by Stanley to reincorporate in Bermuda -- while keeping its headquarters in New Britain -- has caused a storm of controversy since it was announced in February and since has gotten caught up in partisan battles both in Washington and in Connecticut.

Gephardt, flanked by the bill's lead sponsors, Reps. James H. Maloney, D-5th District, and Richard Neal, D-Mass., accused Republicans of being too eager to protect the interests of American corporations at the expense of workers and small shareholders.

``As we approach the Fourth of July, we seek to stamp out one of the most glaring unpatriotic examples of corporate malfeasance,'' he said.

The bill would end the tax benefit immediately and permanently.

Rep. Nancy Johnson, R-6th District, has a rival proposal that would impose a moratorium on what are known as corporate inversions through the end of 2003. That was intended to give Congress time to examine other changes to the tax code to help American companies compete with foreign rivals.

Friday, Johnson praised Thomas for coming up with a proposal so quickly, and for launching a broader debate on corporate tax policies. The Thomas plan, she said, could reduce the need for a moratorium and send a quick message to American and foreign companies that Congress intends to close ``corporate loopholes and keep jobs in America.''

Maloney and Johnson are running against each other this year because the state lost a seat in congressional reapportionment. Their districts were combined.

Thomas accused the Democrats of engaging in ``a political stunt.'' Their approach, he said, deals with symptoms and not the underlying problem.

Thomas said his measure, not yet introduced, will deal with the range of issues that hurt the competitiveness of American companies in the global marketplace. One goal, he said, is to eliminate the incentives for companies to reincorporate abroad.

But Maloney said it's important to act now before any more companies make the move to avoid American taxes.

``We're not saying, `Do this and only do this,' '' Maloney said. ``We're saying, `Put out the fire and then give ourselves the opportunity to make the other changes that we need to make.' ''

Stanley says the move could save the toolmaker $30 million a year in taxes.

Stanley shareholders narrowly passed the reincorporation plan May 9, but because of potential confusion over some voting procedures company officials agreed to a second vote, which has not yet been scheduled.